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The plan has during its existence made two other loans to
participants other than petitioner, and it has required that
those individuals repay those loans. Petitioner knew at the
times of the three loans that his creditworthiness was poor, and
he knew at the times of the second and third loans that Inland’s
creditworthiness was poor. When petitioner and Inland failed to
pay back the three loans according to their terms, petitioner, in
his capacity as plan trustee, neither sought nor attempted to
compel payment.
The relevant provisions of the plan are as follows:
7.2 INVESTMENT POWERS AND DUTIES OF THE TRUSTEE
(a) The Trustee shall invest and reinvest the
Trust Fund to keep the Trust Fund invested without
distinction between principal and income and in
such securities or property, real or personal,
wherever situated, as the Trustee shall deem
advisable, including, but not limited to, stocks,
common or preferred, bonds and other evidences of
indebtedness or ownership, and real estate or any
interest therein. * * *
* * * * * * *
7.4 LOANS TO PARTICIPANTS
(a) The Trustee may, in the Trustee’s
discretion, make loans to Participants and
Beneficiaries under the following circumstances:
(1) loans shall be made available to all
Participants and Beneficiaries on a reasonably
equivalent basis; (2) loans shall not be available
to Highly Compensated Employees in an amount
greater than the amount available to other
Participants and Beneficiaries; (3) loans shall
bear a reasonable rate of interest; (4) loans
shall be adequately secured; and (5) shall provide
for repayment over a reasonable period of time.
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Last modified: May 25, 2011